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Over the past five years, the startup scene in Egypt has grown substantially with new institutions and players emerging.[Listen to the podcast below.]

Opinions differ as to whether the revolutions in Egypt precipitated a culture of entrepreneurship. Some say that gives the revolutions too much credit over the already-growing sentiment among the youth; others believe it directly stimulated a new mentality.

“January 25 [2011] was all about, ‘We can change our destiny,’” reflects Con O’Donnell, an angel investor and co-founder of Sarmady and co-founder and business development lead at Rise Up. “It gave the youth an enormous amount of confidence to break out of a system that made them apathetic: There’s no point doing it, it won’t work. No point doing it because it’s too bureaucratic.”

What is certain, however, is the startup scene in Egypt has grown substantially in the past five years. New institutions and players have emerged, including the Cairo Angels, Flat 6 Labs and The Greek Campus (leased from the American University of Cairo), which houses many startups’ and mentors’ offices as well as entrepreneurship events. Of the nearly 50% growth in ecosystem stakeholders since 2010 across the Middle East, Egypt claims a quarter of these new institutions supporting entrepreneurship.

It used to be that “the idea of starting a business was alien to everyone,” says O’Donnell. “You couldn’t go and ask for someone’s daughter’s hand in marriage. [They’d ask] what do you do? I’m an entrepreneur. Are you a doctor or engineer? There’s even a government website where they ask for your profession, and they only have five choices.”

This burgeoning startup culture grows at speed to be proud of, argues Gamal Sadek, co-founder of Bey2ollak, an award-winning traffic information mobile app operating in Cairo and Alexandria. “I think it’s unusual for societies to adapt so quickly, as we have adapted.”

While the startup ecosystem may be growing, starting a company in Egypt comes with its challenges. “Making business in Egypt is really tough,” remarks Mahmoud Abdelfattah, founder of bkam.com, a price comparison website featuring over 1 million products across four countries’ online retailers. “It’s really hard for small companies.”

Challenges abound such as electricity shortages, congested traffic jams that slow your ability to manage multiple meetings a day, a close-knit monopolistic corporate culture in which established companies rarely engage with startups, or 90-day payment cycles that may be the death of a cash-strapped startup.

However, woven in with these challenges is another narrative wherein young Egyptians are starting social enterprises, for-profit businesses solving social and environmental challenges.

“We’re becoming leaders in building more sustainable societies. It’s one of the stories we should be boasting about,” says Dina Sherif, co-founder of Ahead of the Curve, a social impact training, advisory and investment firm based in Cairo and operating regionally.

Ahead of the Curve has invested in two such companies: Tatweer renovates kiosks to not only modernize the aesthetics of Cairo streets, but to also increase the functionality of these major retail hubs by giving people access to relevant information via community bulletins, a place to recycle their garbage and turning these kiosks into civic hubs. Tatweer has recently moved beyond their pilot phase of five kiosks and aims to renovate 500 kiosks in the coming years. Another company, Tawseela, aims to tackle traffic by getting cars off the streets and offering membership-based buses that cater to the upper- to middle-classes (who statistically drive the most cars on the roads) by equipping the buses with Wi-Fi, and ensuring their cleanliness, comfort and safety.

Yet these encouraging examples “may run out of gas if there aren’t success stories,” cautions O’Donnell. “This is the time to show up in Egypt and invest,” adds Sadek. “What’s lacking in the ecosystem by far are the VCs [venture capitalists]. There are so many opportunities, but we see the opposite … there is a big gap in [local] financing available.”

Instead, investors from outside the region are starting to take notice. “Now you have these guys from Sweden and from the UK coming and cherry-picking the startups that were right under [the local investors’] noses,” O’Donnell exclaims. “Wake up!”

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